Regional Economic Outlook: Middle East and Central Asia Update
Middle East and Central Asia, April 29, 2019
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- Published: April 29, 2019
- Series: Middle East and Central Asia
Overview
- Growth for countries in the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) region has weakened.
- Growth remains broadly stable in the Caucasus and Central Asia (CCA).
- Key external headwinds: volatile oil prices, restrained oil production, and tighter domestic monetary conditions in most oil exporters.
- Elevated public debt in oil importers limits capacity to address critical infrastructure and social needs, restrains growth, and increases vulnerability to external shocks.
- A more challenging external environment increases the urgency of growth-friendly fiscal consolidation and structural reform to enhance resilience and deliver higher and more inclusive private-sector-led growth.
Caucasus and Central Asia (CCA) outlook
- Growth projected at 4.1 percent in 2019 and 2020.
- This outlook is little changed from the 4.2 percent growth seen last year.
- Expected channels and offsets:
- Deceleration of oil-related growth due to lower oil prices and weaker prospects for key trading partners.
- Offsetting factors include a recovery in non-oil growth in Kazakhstan and gas production in Azerbaijan.
- Inflation pressures are easing, with nearly every country in the region expected to see a moderation in prices.
- Growth stabilized after recovering from large external shocks during 2014–16, benefiting from efforts to strengthen macroeconomic policy frameworks.
- Nevertheless, growth remains too low to raise the region’s living standards.
Risks and legacy challenges
- External risk transmission:
- Lower growth in trading partner countries has already affected CCA countries, particularly through remittances; this could intensify amid the global slowdown.
- Oil price swings could negatively affect countries heavily dependent on commodity prices.
- Rising global trade tensions and uncertainties continue to cloud the outlook.
- Financial sector vulnerabilities:
- Banking systems in some countries grapple with problem assets, including nonperforming loans.
- This challenge is particularly pronounced in Azerbaijan, Kazakhstan, and Tajikistan.
- Reforms to address these issues have been slow and uneven.
- Ongoing gaps in regulatory and governance frameworks are concerns.
- Monetary and exchange rate frameworks:
- Monetary and exchange rate regimes have not fully transitioned to credible rules-based frameworks.
- Exchange rates remain largely managed and overvalued in some countries.
- Fiscal buffers:
- Public debt levels have risen in several countries, partly as a side effect of appropriately expansionary fiscal policies during external shocks in 2014-16.
Policy recommendations
- Repair the financial sector:
- Strengthen regulatory and supervisory frameworks.
- Improve corporate governance in banks.
- Bolster the judiciary and legal systems to address problem assets.
- Modernize monetary frameworks:
- Fully transition to modern monetary policy frameworks.
- Make exchange rates more flexible where appropriate.
- Fiscal policy:
- Continue growth-friendly fiscal consolidation to rebuild buffers.
- Governance and structural reform:
- Emphasize good governance and fight corruption.
- Implement structural reforms that promote private sector development and diversification to secure higher, inclusive growth.
- Addressing unfinished reforms is urgent given mounting global headwinds.
Statistical and country coverage notes
- The IMF’s Middle East and Central Asia Department (MCD) countries and territories comprise:
- Afghanistan, Algeria, Armenia, Azerbaijan, Bahrain, Djibouti, Egypt, Georgia, Iran, Iraq, Jordan, Kazakhstan, Kuwait, the Kyrgyz Republic, Lebanon, Libya, Mauritania, Morocco, Oman, Pakistan, Qatar, Saudi Arabia, Somalia, Sudan, Syria, Tajikistan, Tunisia, Turkmenistan, the United Arab Emirates, Uzbekistan, the West Bank and Gaza, and Yemen.
- Statistical appendix tables contain data for 31 MCD countries; data revisions reflect changes in methodology and/or revisions provided by country authorities.
Regional Economic Outlook: Middle East and Central Asia Update — April 2019
Content in this bundle
- Caucasus and Central Asia Update to the Regional Economic Outlook APRIL 2019
- Regional Economic Outlook Update: Caucasus and Central Asia; April 29, 2019
- Statisticalappendix
- Global Developments: Implications for the Middle East and Central Asia Regions
- Chapter 1: MENAP Oil-Exporting Countries: Feeling the Impact of Lower and More Volatile Oil Prices
- Menap Chapter2
- Middle East and North Africa Regional Economic Outlook Presentation, April 2019
- April 2019 Regional Economic Outlook Update: Middle East, North Africa, Afghanistan and Pakistan
- Middle East Regional Economic Update April 2019 Box 1 Online Annex Social Unrest Index
- Statistical Appendix
- Кавказ және Орталық Азия: Жаһандық белгісіздік жағдайында бұрынғы проблемаларды шешу
References
- IMF DATA PORTAL: Middle East and Central Asia Regional Economic Outlook
- https://www.imf.org/-/media/images/imf/publications/reo/mcd/menap/april2019/menap-table.jpg
- https://www.imf.org/-/media/images/imf/publications/reo/mcd/menap/april2019/cca-table.jpg
- The Economic Outlook of the Middle East, North Africa, Afghanistan, and Pakistan in Five Charts
- Five Things to Know About the Economic Outlook in the Caucasus and Central Asia
- https://www.imf.org/en/publications/weo
- Global Economy in Crosscurrents of War and Technology
- https://www.imf.org/en/publications/gfsr
- Global Financial Markets Confront the War in the Middle East and Amplification Risks
- https://www.imf.org/en/publications/fm
- Fiscal Policy under Pressure: High Debt, Rising Risks
- https://www.imf.org/en/publications/reo
- Asia and Pacific
- Europe
- Middle East and Central Asia
- Sub-Saharan Africa
- Western Hemisphere
- https://www.imf.org/en/publications/areb
- Getting to Growth in an Age of Uncertainty
- https://www.imf.org/en/publications/finance-development
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